Unassociated Document


    Exhibit
      10.29


     

    FIRST
      AMENDMENT TO

    CREDIT
      AGREEMENT

    


    


    This
      Amendment (this "Amendment")
      is
      made as of December 31, 2005 by and between KFLG
      WATERTOWN, INC.,
      a
      Massachusetts corporation, with an address at 20 Guest Street, Suite 450,
      Brighton Landing East, Brighton, MA 02135 (the "Borrower"),
      and
TD
      BANKNORTH, N.A.,
      a
      national banking association with an office at 370 Main Street, Worcester,
      Massachusetts 01608 (the "Lender").

    


    RECITALS

    


    A. The
      Lender and the Borrower are parties to that certain Credit Agreement dated
      as of
      May 27, 2005 (as the same is and may hereafter be amended from time to time,
      the
      "Credit
      Agreement").
      Capitalized terms used herein without definition have the meanings assigned
      to
      them in the Credit Agreement.

    


    B. The
      Borrower has requested that the Lender amend the financial covenants and make
      certain other modifications to the terms and conditions of the Credit Agreement
      as described herein.

    


    C. Subject
      to certain terms and conditions, the Lender is willing to agree to the same,
      as
      hereinafter set forth. 

    


    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which is hereby acknowledged, the parties hereto agree as follows:

    


    I. AMENDMENTS TO CREDIT
      AGREEMENT.

    


    A. Definitions.
      Section
      1 of the Credit Agreement is hereby amended as follows:

    


    1. The
      following definition contained in Section 1.1 of the Credit Agreement is hereby
      amended and restated in its entirety as follows:

    


    "'Commitment':
      the
      Lender’s commitment to make Loans in an aggregate principal amount not to exceed
      $1,392,422.22, which is the aggregate principal outstanding balance of the
      Loans
      as of December 31, 2005."

    


    2. The
      following new definitions are hereby inserted into the Credit Agreement in
      proper alphabetical order:

    


    "'Additional
      New Equity':
      new
      equity of the Guarantor, consisting of either common or preferred stock, or
      additional capital contributions, in either case resulting in the receipt by
      the
      Guarantor of unrestricted Gross Cash Proceeds of at least $5,000,000 and Net
      Cash Proceeds of at least $4,500,000, which Net Cash Proceeds shall initially
      be
      deposited into an account held with the Lender."

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    "'Additional
      New Equity Date':
      the
      date on which the Lender has verified that Borrower has received the Net Cash
      Proceeds of the Additional New Equity required by Section 6.1(a)."

     

    "'Blocked
      Account':
      as
      defined in Section 6.1(b)."

     

    "'Consolidated
      Discretionary Capital Expenditures':
      for
      any period, Consolidated Capital Expenditures which do not constitute
      Consolidated Maintenance Capital Expenditures, and which shall include for
      the
      purposes of Section 6.1(e) hereof, (i) investments by any Covered Party for
      the
      purposes of building, purchasing, maintaining or investing in new Units which
      have been funded by such Covered Party as well as those investments which any
      Covered Party has committed to make, but has not yet made,
      and
      (ii)
      capital expenditures which have been funded by any Covered Party as well as
      those capital expenditures for which any Covered Party has committed to make
      payment, but has not yet made payment thereon."

     

    "'Gross
      Cash Proceeds':
      Net
      Cash Proceeds before attorneys’ fees, accountants’ fees, commissions and other
      customary fees and expenses incurred in connection with the incurrence of
      Indebtedness or issuance of any new equity or additional capital
      contributions."

     

    "'Permitted
      Accounts':
      any
      passbook, savings, demand, time, money market, operating or depository bank
      accounts with the Lender, and/or
      certificates of deposit issued by the Lender."

    


    "'Permitted
      Blocked Accounts':
      subject to the Lender's prior approval thereof, any passbook savings or savings
      statement account with the Lender, and/or certificates of deposit issued by
      the
      Lender; in each case on which the Lender has placed a hold causing access to
      such account or certificate of deposit to be restricted."

    


    B. Additional
      Term Loans.

    


    1. Section
      2.2 of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    


    "2.2 Additional
      Term Loans.
      The
      Borrower acknowledges and agrees that after the Closing Date, the Lender made
      additional term loans (the "Additional
      Term Loans")
      to the
      Borrower and that as of December 31, 2005, the aggregate outstanding principal
      amount of the Initial Term Loan and the Additional Term Loans (collectively,
      the
      "Loans")
      is
      $1,392,422.22. The Borrower and the Lender agree that as of December 31, 2005,
      no further advances of Additional Term Loans shall be made by the Lender to
      the
      Borrower." 

    


    2. Sections
      2.3, 2.4(b) and 2.4(c) of the Credit Agreement are hereby deleted in their
      entireties and in each case the phrase "Intentionally Omitted" is substituted
      therefor.

    


    
      
        
        

      

      
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    C. Repayment
      of Loans.
      Section
      2.5 of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    


    "2.5 Repayment
      of Loans.
      Unless
      an Event of Default shall occur and be continuing, prior to the Additional
      New
      Equity Date, the Loans shall not amortize. Commencing on the Additional New
      Equity Date, the Loans shall amortize and principal shall be payable in
      consecutive monthly installments, each in the principal amount of $29,167.00,
      commencing on January 1, 2007 and on the first Business Day of each calendar
      month thereafter. The remaining outstanding principal amount of the Loan shall
      be payable in full on the Maturity Date. Amounts paid or prepaid with respect
      to
      the Loans may not be reborrowed. The amount of any principal prepayment of
      the
      Loans shall be applied to reduce the then remaining installments of the Loans
      in
      inverse order of maturity."

    


    D. Prepayment.
      Section
      2.6 of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    


    "2.6 Prepayment
      Penalty.
      The
      Borrower may at any time and from time to time prepay the Loans, in whole or
      in
      part, without premium or penalty except for any prepayment fee that may be
      due
      under the following sentence. Any such prepayment shall be made together with
      all other amounts due and owing under the Loan Documents at the time of
      prepayment (including, without limitation, any amounts owing pursuant to Section
      2.12) and, if the date of such prepayment is on or before the second anniversary
      of the date hereof (unless such prepayment is made in connection with the
      occurrence of an Event of Default or at the written request of the Lender),
      a
      prepayment fee in the amount of $10,000. Prepayments shall be made upon
      irrevocable notice by the Borrower delivered to the Lender no later than 11:00
      A.M., Boston time, one Business Day prior thereto, which notice shall specify
      the date and amount of prepayment. If any such notice is given, the amount
      specified in such notice shall be due and payable on the date specified therein,
      together with accrued and unpaid interest to such date on the amount prepaid.
      Partial prepayments of any Loan shall be in an aggregate principal amount of
      $100,000 or a whole multiple of $50,000 in excess thereof." 

     

    E. Mandatory
      Prepayments.
      Section
      2.7(e) of the Credit Agreement is hereby deleted in its entirety and the phrase
      "Intentionally Omitted" is substituted therefor.

    


    F. Interest
      Rate.
      Section
      2.8(a) of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    


    "(a) The
      Loans
      shall bear interest at a rate per annum equal to the Prime Rate."

     

    G. Financial
      Reporting.
      

    


    1. Section
      5.1(a) of the Credit Agreement is hereby amended by deleting the word "and"
      at
      the end of subsection (vii) thereof, substituting a semi-colon for the period
      at
      the end of subsection (viii) thereof; and adding the following new subsections
      (ix) and (x) immediately following subsection (vii) thereof as
      follows:

    


    
      
        
        

      

      
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    "(ix)
      as
      soon as available, but in any event not later than 15 days after the end of
      each
      calendar month, the unaudited consolidated and consolidating balance sheet
      of
      the Borrower and its Subsidiaries as at the end of such month and the related
      unaudited consolidated and consolidating statements of income and of cash flows
      for such month and the portion of the fiscal year through the end of such month,
      setting forth in each case in comparative form the figures for the previous
      year
      and the corresponding figures from the Borrower’s budget for such period, in
      each case certified by a Responsible Officer as being fairly stated in all
      material respects (subject to normal year-end audit adjustments);
      and

     

    (x)
      as
      soon as available, but in any event not later than 15 days after the end of
      each
      calendar month, the unaudited consolidated and consolidating balance sheet
      of
      the Guarantor and its Subsidiaries as at the end of such month and the related
      unaudited consolidated and consolidating statements of income and of cash flows
      for such month and the portion of the fiscal year through the end of such month,
      setting forth in each case in comparative form the figures for the previous
      year
      and the corresponding figures from the Guarantor’s budget for such period
      together with a report on franchisee royalties received with respect to such
      month and a statement as to the number of franchise agreements in effect and
      whether any of such franchise agreements are then in default, in each case
      certified by a Responsible Officer as being fairly stated in all material
      respects (subject to normal year-end audit adjustments);"

     

    2. Section
      5.1(b) of the Credit Agreement is hereby amended by adding the following
      sentence at the end thereof:

     

    "The
      Covered Parties will permit the Lender to monitor at all times the account
      balances in Borrower's and/or Guarantor's accounts held with the
      Lender."

     

    H. Certificates;
      Other Information.
      Section
      5.2(b) of the Credit Agreement is hereby amended by adding the phrase "and
      Section 5.1(a)(ix) and (x)" immediately after the phrase "pursuant to Section
      5.1(a)(iii) and (iv)"; and by inserting at the end thereof the
      following:

    


    "Any
      compliance certificates furnished in connection with the calculations required
      by Sections 6.1(c), (d) and (e) hereof shall include with respect to the
      applicable period, a listing of all Consolidated Discretionary Capital
      Expenditures made during such period, the amount of same that has been funded
      during such period, and the amount of commitments to make Discretionary Capital
      Expenditures which are outstanding and/or were committed to during such period,
      but have not yet been paid."

    


    I. Notices
      regarding Additional New Equity.
      Section
      5.7 of the Credit Agreement is hereby amended by deleting the word "or" at
      the
      end of subsection (g) thereof, deleting the period at the end of subsection
      (h)
      thereof and substituting therefor "; or"; and adding the following new
      subsection (i) immediately following subsection (h) thereof as
      follows:

    


    
      
        
        

      

      
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    "(i)
      any
      Additional New Equity raised by the Guarantor and the details thereof, including
      without limitation, the type, amount, source, date raised, the Gross Proceeds
      and Net Cash Proceeds thereof." 

    


    J. Bank
      Accounts.
      Section
      5.10 of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    


    "5.10 Depository
      Accounts; Additional Accounts; Blocked Account.
      

     

    (a)
      At
      all times prior to the Additional New Equity Date, maintain all operating,
      depository and disbursement bank accounts with the Lender, except as otherwise
      permitted by Section 3.23 hereof and Section 4(j) of the Security Agreement.
      After the Additional New Equity Date, provided the Borrower and Guarantor
      maintain their respective operating accounts with the Lender and no Event of
      Default shall have occurred and be continuing (including without limitation
      a
      Default or Event of Default under Section 6.1(c)(ii) hereof), the Loan Parties
      may maintain accounts at banks and financial institutions other than the Lender.
      

     

    (b)
      Establish and maintain at all times prior to the Additional New Equity Date,
      the
      Blocked Account as required by Section 6.1(b) hereof. The Covered Parties each
      represent and warrant that there are no perfected liens or encumbrances with
      respect to the Blocked Account, other than in favor of the Lender, and each
      agrees that it shall not enter into any acknowledgment or agreement that gives
      any other person or entity except Lender control over, or any other security
      interest, lien or title in, the Blocked Account. The Blocked Account shall
      be
      under the sole dominion and control of the Lender. Neither any Covered Party,
      nor any other person or entity, acting through or under any Covered Party,
      shall
      have any control over the use of, or any right to withdraw any amount from,
      the
      Blocked Account, provided however, that as long as no Default or Event of
      Default exists immediately before and after giving effect thereto, the Lender
      will distribute to the Guarantor cash interest earned on the funds in the
      Blocked Account. No Covered Party will close the Blocked Account prior to the
      Additional New Equity Date. All funds in the Blocked Account shall be subject
      to
      the provisions of Section 8.7 hereof."

    


    
      
        
        

      

      
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    K. Financial
      Covenants.
      Section
      6.1 of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    


    "6.1 Financial
      Condition Covenants.

    


    (a) Minimum
      Additional New Equity.
      Fail to
      cause the Guarantor to raise the Additional New Equity by June 1,
      2006.

     

    (b) Blocked
      Account. Fail
      to
      cause the Guarantor to maintain at all times prior to the Additional New Equity
      Date, cash (in U.S. Dollars) in an aggregate amount of at least $1,400,000
      in a
      Permitted Blocked Account held with Lender (the "Blocked
      Account").
      

    


    (c) Minimum
      Account Balances.
      Fail to
      maintain, on a combined basis with the Guarantor, in Permitted Accounts held
      with the Lender: (i) at all times prior to the Additional New Equity Date,
      cash
      (in U.S. Dollars) in an aggregate amount of at least $1,500,000 (which amount
      may include, without limitation, amounts held in the Blocked Account); and
      (ii)
      at all times on and after the Additional New Equity Date, cash (in U.S. Dollars)
      in an aggregate amount of at least $1,700,000.

     

    (d) Consolidated
      Maintenance Capital Expenditures.
      After
      the Additional New Equity Date, the Borrower will not make Consolidated
      Maintenance Capital Expenditures unless both before and after giving effect
      to
      such capital expenditure, no Default or Event of Default shall have occurred
      and
      be continuing, including without limitation, under Section 6.1(c)
      hereof.

    


    (e) Consolidated
      Discretionary Capital Expenditures.
      After
      the Additional New Equity Date, the Borrower will not make Consolidated
      Discretionary Capital Expenditures unless: (i) at the time of any such funding
      of such Consolidated Discretionary Capital Expenditures or commitment to make
      any such Consolidated Discretionary Capital Expenditures there is not (and
      after
      giving effect to such funding, and/or giving effect to such commitment as though
      such commitment has been funded on the date of such commitment, there will
      not
      be) any Default or Event of Default (with compliance with Section 6.1(c) being
      determined for this purpose as at the date immediately preceding the date of
      such funding and/or commitment, giving effect to such funding and/or commitment
      on a pro forma
      basis),
      and (ii) prior to the funding of any Consolidated Discretionary Capital
      Expenditure or commitment to make any Consolidated Discretionary Capital
      Expenditure, the Borrower shall have delivered to the Lender a pro forma
      Compliance Certificate containing all information and calculations necessary
      for
      evidencing compliance by each Covered Party with the provisions of Section
      6.1(c) hereof."

    


    L. Indebtedness
      to Borrower.
      Section
      6.2(b) of the Credit Agreement is hereby deleted in its entirety and the phrase
      "Intentionally Omitted" is substituted therefor.

    


    M. Loans
      to Guarantor.
      Section
      6.8(d) of the Credit Agreement is hereby deleted in its entirety and the phrase
      "Intentionally Omitted" is substituted therefor.

     

    
      
        
        

      

      
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    N. Full
      Funding.
      Section
      6.17 of the Credit Agreement is hereby deleted in its entirety and the phrase
      "Intentionally Omitted" is substituted therefor.

    


    O. Title
      to Accounts.
      Section
      8.7 of the Credit Agreement is hereby amended by adding the following at the
      end
      thereof:

    


    "In
      addition to the foregoing, upon any Event of Default, all right, title and
      interest in each account of each Covered Party held with the Lender shall
      immediately and automatically, without demand or notice of any kind, be
      transferred to the Lender, the Lender shall be the owner thereof, and as such,
      the Lender may apply the funds held in such accounts to the Obligations in
      such
      manner and order as the Lender may elect in its sole discretion."

     

    II. NO FURTHER AMENDMENTS.

    


    Except
      as
      specifically amended herein, all terms and conditions of the Credit Agreement
      shall remain in full force and effect as originally constituted and is hereby
      ratified and affirmed in all respects and the indebtedness of the Borrower
      to
      the Lender evidenced hereby and by the Note is hereby reaffirmed in all
      respects. This Amendment constitutes an amendment to and modification of the
      Credit Agreement. On and after the date hereof, each reference in the Credit
      Agreement to "this Agreement", "hereunder", "hereof" or words of like import
      referring to the Credit Agreement, shall mean and be a reference to the Credit
      Agreement as amended by this Amendment, and each reference in any Loan Document
      between the Borrower and the Lender or, the Guarantor and the Lender, to the
      Credit Agreement, "thereunder", "thereof" or words of like import referring
      the
      Credit Agreement shall mean a reference to the Credit Agreement as amended
      by
      this Amendment.

    


    III. REPRESENTATIONS, WARRANTIES AND COVENANTS.

    


    The
      Borrower represents, warrants and covenants as follows as of the date
      hereof:

    


    A. Each
      of
      the representations and warranties contained in the Credit Agreement, as amended
      by this Amendment, and the other Loan Documents are true and correct as of
      the
      date hereof. No material adverse change has occurred in the assets, liabilities,
      financial condition, business or prospects of the Borrower or the Guarantor
      from
      that disclosed in the management-prepared financial statements most recently
      distributed to the Lender. No Default or Event of Default has occurred or is
      continuing.

    


    B. The
      Credit Agreement, as amended by this Amendment, constitutes the legal, valid
      and
      binding obligations of the Borrower, enforceable against it in accordance with
      their respective terms, subject to bankruptcy, insolvency, reorganization,
      moratorium and similar laws affecting the rights and remedies of creditors
      generally or the application of principles of equity, whether in any action
      at
      law or proceeding in equity, and subject to the availability of the remedy
      of
      specific performance or of any other equitable remedy or relief to enforce
      any
      right thereunder.

    


    
      
        
        

      

      
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    C. The
      execution and delivery of this Amendment and the other documents, if any, by
      the
      Borrower and the transactions contemplated hereby are within the corporate
      power
      and authority of the Borrower and have been authorized by all necessary
      corporate proceedings, and do not and will not (i) contravene any provision
      of
      the charter documents or by-laws of the Borrower or any law, rule or regulation
      applicable to the Borrower; (ii) contravene any provision of, or constitute
      an
      event of default or event that, but for the requirement that time elapse or
      notice be given (or both) would constitute an event of default under, any other
      agreement, instrument, order or undertaking binding on the Borrower; or (iii)
      result in or require the imposition of any encumbrance or lien on any of the
      properties, assets or rights of the Borrower (other than pursuant to any
      Security Document executed in connection with the Credit
      Agreement).

    


    D. The
      Borrower and the Lender acknowledge and agree that but for this Amendment,
      the
      Borrower would have been in default under the terms and conditions of the Credit
      Agreement, and that the terms and conditions set forth herein and the avoidance
      of such a default constitute fair and adequate consideration mutually exchanged
      by the Borrower and the Lender in their execution and delivery of this
      Amendment. 

    


    IV. CONDITIONS.

    


    A. This
      Amendment shall become effective on the first date on which the Borrower shall
      have executed and delivered to the Lender (or shall have caused to be executed
      and delivered to the Lender by the appropriate persons) the
      following:

    


    1. This
      Amendment; 

    


    2. Evidence
      that Borrower shall have caused the Guarantor to deposit cash (in U.S. Dollars)
      in an aggregate amount of at least $1,400,000 in a Permitted Blocked Account
      held with the Lender; 

    


    3. A
      fully-executed copy of the agreement with the investor group evidencing a
      commitment for Additional New Equity in a minimum amount of $5,000,000;
      and

    


    4. Such
      other supporting documents and certificates as the Lender or its counsel may
      reasonably request.

    


    B. All
      legal
      matters incident to the transactions contemplated hereby shall be satisfactory
      to counsel for the Lender.

    


    V. CONFIRMATION OF SECURITY.

    


    The
      Obligations of the Borrower to the Lender, including, without limitation, the
      liabilities and obligations of the Borrower under the Credit Agreement, as
      amended hereby, and the Notes, are secured by, and entitled to all benefits
      of,
      the Security Agreement, the Guarantee and Security Agreement, any Mortgage,
      any
      Leasehold Security Document, and any other collateral granted by the Borrower
      or
      Guarantor to the Lender. The Covered Parties confirm and reaffirm that each
      has
      granted to Lender a security interest in, among other property, its deposit
      accounts, including without limitation the Blocked Account, and all credits
      or
      proceeds thereto and all monies, checks and other instruments held or deposited
      therein.

    


    
      
        
        

      

      
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    VI. MISCELLANEOUS.

    


    A. The
      Borrower represents, warrants, and agrees that, to its knowledge, the Borrower
      has no claims, defenses, counterclaims or offsets against the Lender in
      connection with the Credit Agreement or the Obligations, and, to the extent
      that
      any claim, defense, counterclaim, or offset may exist, the Borrower hereby
      affirmatively WAIVES
      AND RELEASES
      the
      Lender from the same.

    


    B. The
      Borrower agrees to reimburse the Lender upon demand for all reasonable
      out-of-pocket costs, charges, liabilities, taxes and expenses of the Lender
      in
      connection with (i) the preparation, negotiation, interpretation, execution
      and
      delivery of this Amendment and any other agreements, instruments or documents
      executed pursuant or relating hereto, and (ii) any enforcement hereof. The
      legal
      fees for the preparation, negotiation, interpretation, execution and delivery
      of
      this Amendment and any other agreements, instruments or documents executed
      pursuant or relating hereto shall be limited to $2000.

    


    C. This
      Amendment shall take effect as a sealed instrument under the laws of The
      Commonwealth of Massachusetts.

    


    D. This
      Amendment may be executed by the parties hereto in several counterparts hereof
      and by the different parties hereto on separate counterparts hereof, all of
      which counterparts shall together constitute one and the same agreement.
      Delivery of an executed counterpart of a signature page to this Amendment by
      facsimile shall be effective as delivery of a manually executed counterpart
      of
      this Amendment.

    


    [The
      next page is the signature page.]

    


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Lender and the Borrower have caused this Amendment to
      be
      duly executed as a sealed instrument by their duly authorized representatives,
      all as of the day and year first above written.

    

      
        	
                KFLG
                  WATERTOWN, INC.

              
	 
	
                By:

              	 
	 	
                Name:

              
	 	
                Title:
                  

              
	 	 
	
                TD
                  BANKNORTH, N.A.

              
	 
	
                By:

              	 
	 	
                Name:

              
	 	
                Title:

              


      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    AGREEMENT,
      CONSENT AND CONFIRMATION OF GUARANTOR

    


    


    The
      undersigned Guarantor does hereby acknowledge and consent to the execution,
      delivery and performance of the within foregoing Amendment, confirms the
      continuing effect of that certain Guarantee and Security Agreement dated as
      of
      May 27, 2005, as amended, made by such Guarantor in favor of the Lender, after
      giving effect to the foregoing Amendment, and agrees to the provisions of the
      within and foregoing Amendment which apply to it by their terms, including
      without limitation, the obligation of the Guarantor to (i) raise the Additional
      New Equity by June 1, 2006 as required by Section 6.1(a) of the Credit
      Agreement, (ii) maintain at all times prior to the Additional New Equity Date
      at
      least $1,400,000 cash in the Blocked Account as required by Section 6.1(b)
      of
      the Credit Agreement, and (iii) comply with the provisions of Section 5.10(b)
      hereof.

    


    Accepted
      and agreed to as of December 31, 2005:

    

      
        	
                KNOWFAT
                  FRANCHISE COMPANY, INC.

              
	 	 
	
                By:

              	 
	 	
                Name:

              
	 	
                Title: